We start our series of articles focusing on the ‘Trading Performance Scorecard’. This focuses on eight factors that influence how well you trade and how well your development as a trader is going each week. We will then begin to expand on each topic.
Composure is defined here as a blend of confidence, patience and calm that allows you to wait for your trade to set up. It allows you to stay in winning trades, take your losses and to be able to focus on the longer term consequences of your actions and to offset any short term urges.
In this article I want it to focus on the practical application that will improve and reinforce composure, with a blend of confidence, patience and calm. Let's take each in turn. In order to build confidence I focus on an overall process for the trading day and a targeted process for my trading. It is important to focus on the routine and process. My actions are deliberate and in a disciplined routine this allows me to review and adapt to constantly improve my overall approach. This builds confidence because the enjoyment of having a detailed plan and knowing which parts to adjust and then repeating that process through a structured systematic approach will bring consistency and high performance.
This overall approach filters down into the actual trading to focus in on the process built discipline. Again this provides a checklist that can be run through for each trade and because trading can be fast paced or at times you can become clouded in regards to your actions. If you have a detailed plan, and stick to this then it makes your review, recognition, and adjustment easier as you can pinpoint which tasks or section need to be looked at. This overall and specific approach builds immense confidence as it the process that you are adjusting to improve performance and not just randomly tinkering.
Concentrating on the process also reinforces patience because you have to run through your set guidelines, rules, or principles. This slows down when you’re thinking through your actions and your decision-making. Now this may all still be within a very short space of time, even seconds, but having deliberate steps helps. This ability allows you to pause before you react, it provides self-regulation and self-control, this is composure. Being mindful of patience and the process you're concentrating on and being mindful of each step means that your outcome is more likely to be successful as opposed to trading outside of your plan, on an impulse or an emotional reaction.
Procedures in place focusing on each step provides a calmness to the storm of trading. You can reduce some anxiety or worry about getting into the markets or the fear of missing out because you have to follow your process and procedures, and if following these means you miss a trade then you can have the confidence that it was correct to miss the trade. Being calm promotes better decision-making and better analysis of yourself and better recognition of yourself.
It is easy to write about process and the benefits of focusing in on each step in your procedure but it takes some specific actions. For example, mindfulness of the breath, mindful minutes, noticing your noticing and being able to master this and see the benefit. I find SBNRR (stop breathe notice reflect respond), to be helpful in conjunction with my routine, and checklists which are written down. I also journal and have a mistake sheet on my desk which adds another layer and allows me to pause, reflect, and record information at the time. So my review later on, either the end of the day or the end of the week can be accurate.
In conclusion trading is complicated, multifaceted, multi-disciplined and basically difficult. It’s very hard to put into simple terms but I will try my best. What we are looking for is a process driven approach with a set of rules and principles that is personable and agreeable to your own personality. The first step is to concentrate fully on following your rules and principles, having some procedures in place to slow you down or to insert some deliberate steps to make you recognise and notice yourself, your environment, and your trading. This will provide an overall trading day routine and sticking to this filters down to a routine and disciplined approach to trading. This builds confidence as you have the lists in place to follow and can see exactly where to adjust. You build patience due to having to follow the process, this improves the actionable trades you will take. Finally, you will feel calmer due to being happy with what you are deliberately doing.